Coty Inc. reported a $164.2 million loss for the third quarter, pulled down by acquisition and restructuring charges.
The business posted $2 billion in sales for the quarter, up 5 percent for the combined company year-over-year. Coty has been on an acquisitions spree, buying 41 beauty brands from Procter & Gamble as well as Brazil-based Hypermarcas, hair brand Ghd, and a majority stake in social selling business Younique.
The beauty player’s third quarter numbers were hurt by the impact of $213.5 million in restructuring and acquisition charges. The loss per share was 22 cents. Excluding positive contributions from acquisitions Ghd, Younique and Hypermarcas, the combined company net revenues were down 2 percent in constant currency, the company said.
For the first nine months of its fiscal year, Coty posted $5.4 billion in net revenues, with a $117.4 million loss (a 19 cent loss per diluted share). For that period, Coty had $454.1 million in pre-tax restructuring and acquisition-related charges.
“Q3 was a better quarter,” said Coty chief executive officer Camillo Pane. “The underlying net revenue trend, excluding the contributions from Ghd, Younique and one month of the Brazil acquisition, improved sequentially to minus 2 percent at constant currency compared to a high single digit decline in the first half. This improvement was driven by good growth performance in the Luxury division, flat performance in Professional Beauty, and some improvement but continued negative performance in the Consumer Beauty division.”
He continued: “Equally encouraging was the performance of our acquired businesses of the Brazil acquisition, Younique and Ghd. These three businesses combined showed strong performance year over year, outperforming their respective markets and are expected to materially strengthen the growth profile of the total company.”
Coty also recently agreed to buy the Burberry beauty license, which will become part of its Luxury portfolio.
Pane said that Coty worked in the quarter to turn the company into a “challenger and leader in beauty” through repositioning some brands, changing its innovation and product development process, accelerating digital endeavors including e-commerce, and revamping in-store execution.